ATLANTA (ResourceInvestor.com) -- Several of the indicators for the gold and silver markets followed closely by the Got Gold Report improved over the past holiday-influenced week, as expected. For example, we can note a return to positive money flow (more wealth entering than leaving) into gold and silver exchange traded funds. Alongside that important detail we can add that mining shares substantially outperformed the metals and that has led to a very significant one-week improvement in the Cash Gold Minus HUI indicator.
COT Data Delayed Till Monday
Unfortunately no one takes holidays more seriously than the good folks at the Commodities Futures Trading Commission (CFTC) and even though the July 4th festivities fell on a Wednesday this year the CFTC elected to delay issuing their commitments of traders (COT) data until Monday 7/9 in the afternoon. Consequently we won't know until after the Monday trading has ended where the largest traders of gold, silver and U.S. dollar index futures were positioned.
The last full Got Gold Report noted that the largest (and presumably better informed) traders for gold metal futures at the COMEX, those classed as "commercial," had gotten out of a huge number of their collective net short positions and ended the previous week with the least net short position since January 9 when gold was trading in the $610s. That report was from the close of trading Tuesday 6/26 with gold at $642.15. It will be very interesting to see where the commercials had positioned by the close this past Tuesday, 7/3 as the cash market price for an ounce of immediate delivery gold showed a last trade of U.S. $653.15, a Tuesday to Tuesday gain of $11.00.
Mining Shares Catch a Bid
Since Tuesday gold traded more or less sideways showing a last trade Friday 7/6 of $654.80 on the cash market, but while it did mining shares caught a bit of a bid and significantly outperformed the actual metals. The action in mining shares, best seen in the HUI:Gold Ratio (see the graph links at the end of this article) and in the Cash Gold Minus HUI indicators below, suggests that a new spate of positive money flow into the sector may be getting underway. That idea should be unsettling for bearish interests in the two most popular precious metals.
The next full Got Gold Report is scheduled for next weekend, but for our regular readers below are links to most of the technical charts used regularly in the report with updated technical and market commentary on some of the charts themselves. Immediately below is an update on one of the more important indicators this report tracks.
Cash Gold-HUI. The cash gold minus HUI indicator closed the week at 302.19, significantly better than the 320.15 reading in the last full GGR .
When this indicator is falling sharply (like right now) it can be suggestive of increasing confidence and/or increasing positive money flow into the precious metals mining sector, especially if sustained rather than just a spike in one direction.
With about 9 tonnes (of gold) worth of positive money flow into gold ETFs over the past week, about 60 tonnes (of silver) worth of positive money flow into the silver ETF and a substantial outperformance delivered by mining shares relative to the metals, the indicators this report follows closely continue to improve which supports firmer gold prices more than not, but it would have been nice if we would have had the COT data on time this week for a bit more of the picture.
The usual summertime light liquidity trading caveats still apply. When liquidity is light and trading thin markets can move and be moved farther and faster than average.
Until next time, as always, MIND YOUR STOPS.
Got Gold Report Charts:
Silver 1-year daily
Gold 9-month daily
Gold 2-year weekly
HUI 9-month daily
HUI 3-year weekly
HUI:Gold Ratio 1-year weekly
HUI:Gold Ratio 2-year weekly
U.S. dollar 1-year daily
U.S. dollar 2-year daily
The above contains opinion and commentary of the author. Each person should study the issues carefully and, as always, make their own informed decisions. Disclosure: The author currently holds a long position in streetTRACKS Gold Shares, iShares Silver Trust and holds various long positions in mining and exploration companies.
